Nigeria’s currency weakened at the official foreign exchange window after mounting demand for international payments outweighed available dollar supply, bringing an abrupt pause to the naira’s recent appreciation streak.
Market activity at the Nigerian Foreign Exchange Market (NFEM) showed renewed pressure on the local currency, as the absence of intervention from the Central Bank of Nigeria (CBN) left the official segment to absorb growing demand independently.
For a second straight trading session, the naira depreciated against the U.S. dollar, closing at ₦1,355 despite expectations among currency bulls that the local unit would maintain its upward momentum.
Rising Dollar Demand Meets Limited Supply
The recent rally had been fueled largely by improved inflows from exporters, non-bank corporates, and other autonomous market participants, which temporarily boosted liquidity in the FX market. However, as foreign payment requests surged during the week, those inflows proved insufficient to sustain exchange rate stability.
With the CBN refraining from active intervention during the naira’s rapid gains, the official window experienced a widening imbalance between supply and demand. The uptick in payment obligations for imports and offshore commitments intensified pressure on the currency.
Latest daily FX statistics from the apex bank showed the spot rate slipping 0.13 percent to ₦1,355.42 per dollar at the NFEM window on Friday. Intraday trading reflected additional softness, with the rate weakening further to ₦1,358 — matching the closing rate recorded at the CBN window.
The data signals a clear reversal from the swift rally observed earlier in the week.
Divergence Between Official and Parallel Markets
While the official segment recorded depreciation, the parallel market presented a contrasting development. The naira strengthened to ₦1,400 per dollar in informal trading, underscoring persistent divergence between Nigeria’s regulated FX market and the street market.
This disconnect highlights ongoing structural inefficiencies within the FX ecosystem, where supply dynamics and policy signaling continue to shape rate differentials across segments.
Analysts note that intermittent pauses in FX inflows have historically triggered short-term volatility, particularly when dollar demand from corporates intensifies.
Oil Market Volatility Adds External Pressure
Global oil prices — a key driver of Nigeria’s FX earnings — ended Friday largely unchanged after a volatile session that reflected competing macroeconomic and geopolitical forces.
Crude prices posted their first consecutive weekly decline of the year, as traders balanced expectations of increased supply from the OPEC+ alliance against geopolitical tensions and broader market weakness.
West Texas Intermediate (WTI) crude declined by approximately 1 percent for the week and closed the day nearly flat.
In geopolitical developments, U.S. President Donald Trump disclosed that an additional aircraft carrier had been deployed to the Middle East as a contingency measure should nuclear negotiations with Iran fail.
“If we don’t have a deal, we’ll need it,” Trump stated at the White House, while expressing optimism that talks would eventually succeed.
Market participants are closely monitoring Washington–Tehran relations, as any escalation could disrupt Middle Eastern supply flows and impact global oil pricing — a critical variable for Nigeria’s FX outlook.
With foreign payment backlogs expanding and intervention absent, analysts suggest the naira may remain vulnerable to short-term fluctuations unless FX inflows improve materially.
